Financial Analysis: J & J Snack Foods (NASDAQ:JJSF) vs. Lamb Weston (NYSE:LW)

Lamb Weston (NYSE:LW) and J & J Snack Foods (NASDAQ:JJSF) are both consumer staples companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, profitability, institutional ownership, earnings, dividends, risk and analyst recommendations.

Profitability

This table compares Lamb Weston and J & J Snack Foods’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Lamb Weston	4.61%	23.77%	5.76%
J & J Snack Foods	3.75%	9.01%	6.18%

Institutional and Insider Ownership

89.6% of Lamb Weston shares are owned by institutional investors. Comparatively, 76.0% of J & J Snack Foods shares are owned by institutional investors. 0.3% of Lamb Weston shares are owned by insiders. Comparatively, 20.4% of J & J Snack Foods shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Lamb Weston and J & J Snack Foods”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lamb Weston	$6.52 billion	0.89	$357.20 million	$2.14	19.69
J & J Snack Foods	$1.55 billion	0.91	$65.60 million	$2.98	25.31

Lamb Weston has higher revenue and earnings than J & J Snack Foods. Lamb Weston is trading at a lower price-to-earnings ratio than J & J Snack Foods, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings and target prices for Lamb Weston and J & J Snack Foods, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lamb Weston	1	10	3	0	2.14
J & J Snack Foods	2	0	1	0	1.67

Lamb Weston presently has a consensus target price of $47.82, suggesting a potential upside of 13.48%. J & J Snack Foods has a consensus target price of $120.00, suggesting a potential upside of 59.11%. Given J & J Snack Foods’ higher probable upside, analysts clearly believe J & J Snack Foods is more favorable than Lamb Weston.

Dividends

Lamb Weston pays an annual dividend of $1.52 per share and has a dividend yield of 3.6%. J & J Snack Foods pays an annual dividend of $3.20 per share and has a dividend yield of 4.2%. Lamb Weston pays out 71.0% of its earnings in the form of a dividend. J & J Snack Foods pays out 107.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Lamb Weston has increased its dividend for 7 consecutive years and J & J Snack Foods has increased its dividend for 20 consecutive years. J & J Snack Foods is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Lamb Weston has a beta of 0.47, suggesting that its share price is 53% less volatile than the S&P 500. Comparatively, J & J Snack Foods has a beta of 0.38, suggesting that its share price is 62% less volatile than the S&P 500.

Summary

Lamb Weston beats J & J Snack Foods on 9 of the 17 factors compared between the two stocks.

About Lamb Weston

Lamb Weston Holdings, Inc. produces, distributes, and markets frozen potato products worldwide. The company operates through four segments: Global, Foodservice, Retail, and Other. It offers frozen potatoes, commercial ingredients, and appetizers under the Lamb Weston brand, as well as under various customer labels. The company also provides its products under its owned or licensed brands, such as Grown in Idaho and Alexia, and other licensed brands, as well as under retailers' own brands. In addition, it engages in the vegetable and dairy businesses. The company sells its products through a network of internal sales personnel and independent brokers, agents, and distributors to chain restaurants, wholesale, grocery, mass merchants, club and specialty retailers, businesses, educational institutions, independent restaurants, regional chain restaurants, and convenience stores. Lamb Weston Holdings, Inc. was incorporated in 1950 and is headquartered in Eagle, Idaho.

About J & J Snack Foods

J&J Snack Foods Corp. engages in the manufacturing of nutritional snack foods and distribution of frozen beverages to the food service and retail supermarket industries. It operates through the following segments: Food Service, Retail Supermarkets, and Frozen Beverages. The Food Service segment includes soft pretzels, frozen novelties, churros, handheld products, and baked goods. The Retail Supermarkets segment offers soft pretzel products including Superpretzel, frozen juice treats and desserts, including Luigi’s real Italian ice, Minute Maid juice bars and soft frozen lemonade, Whole Fruit frozen fruit bars and sorbet, Philly Swirl cups and sticks, ICEE Squeeze-Up Tubes and dough enrobed handheld products including Patio burritos. The Frozen Beverages segment provides frozen beverages to the food service industry primarily under the names ICEE, SLUSH PUPPIE, and PARROT ICE in the United States, Mexico, and Canada, as well as repair and maintenance services. The company was founded by Gerald B. Shreiber in 1971 and is headquartered in Mount Laurel, NJ.